The battle for broadband - US versus UK

While US consumers enjoy full blown competition with choices of broadband services from a variety of telcos and cable companies, UK users are still waiting for BT to roll out DSL services, according to principal analyst at research firm Gartner Group, Kathie Hackler.

Experts predict the first ADSL services in the UK will cost around £50 per month. Meanwhile US users receive comparable services from carriers like Pacific Bell for around $50 (£30). Broadband via cable in the US cost around $40 (£25).

The key to cheap services will be competition between telcos and cable companies according to Hackler. The battle between DSL and cable is already raging in the US. "Cable runs past just 45 million US homes compared to 180 million telephone lines, so telcos should have the advantage" Hackler says.

However it is cable companies that are forcing the telcos hands. Cable networks are the only strong pressure on the telephone companies,Hackler says. As in the UK, change is fuelled by regulation. "80 percent of the time telcos do things only because the regulators tell them to, compared to just 5 percent because they think it will make money",she adds.

In the US, the regulators are keen to see broadband access in every American home and as a result, the cable companies have been given a lot of leeway. Users wishing to have broadband via cable are forced to use the cable company's ISP, a situation which is enraging other ISPs like AOL.

There have also been problems with security of cable networks, with reports of users being able to access their neighbour's PC, but for the moment cable is winning the battle for broadband with around 1.5 million cable modems installed in 1999, compared to just a few hundred thousand DSL lines.

In the UK, consumers will have to wait until 2002 for affordable broadband Hackler predicts. This is when cable companies like AT&T and MCI WorldCom will roll out services, forcing BT and other telcos to do the same.

There is one other barrier to fast DSL rollout in the UK according to Hackler. "Telcos in Europe are not anxious to deploy DSL because it will canabalise their ISDN services", she says. "They are protecting their revenue, but when they don't have a choice, they will roll it out."

By 2003, Gartner Group predicts DSL will have overtaken cable as the broadband access of choice for consumers with 17 million DSL lines worldwide, compared to 10 million cable lines.

One stark illustration of how far ahead the US is in terms of deployment of broadband lies with the real estate agents. In Silicon Valley, broadband access is already being put on the list of desirable assets for property in the area.